Sunday's Demand Spike for Pizza

WSJ.com - Pizza-Delivery Teams Are Training Hard For Sunday's Game ($$$)

I started reading this with great interest, expecting to read about the operations side of a pizza delivery business. It also made me think back to the folks at "Super Fast Pizza", the company that bakes the pizza WHILE they are driving to you, with a 15-minute delivery time (now that's lean).

Anyway, interesting article, although much of it focused on Domino's, which is about my least favorite "pizza." I understand why half the pizza market is still owned by local pizza shops, according to the article.

So, getting beyond the quality of the product, a few logistics details about Super Bowl Sunday.

Demand Spikes: a lot of Domino's stores sell 50% to 100% more pizzas than they would on a normal Sunday -- some end up selling four times as many. A local chain will "have 40 delivery drivers on duty, about 15 more than usual."

I'm surprised the demand spike isn't worse than that. It seems like you could design a system that was flexible to that degree. While TV's are typically banned from the stores, some Domino's will put TV's in to help anticpate the mini demand spikes during the day (commercials and halftime). That's a clever way of anticipating demand and it probably helps cut absenteeism that day.

Division of Labor / Standard Work: "To keep up with the volume of orders, which some store owners say can exceed 200 pizzas an hour during the Super Bowl, Domino's employees each are assigned an unusually narrow task: Some do nothing but put order slips on the pizza boxes. For others, the sole job is to keep drivers well stocked with small bills. The best pizza cutters slice pizza, while the most logistically inclined are put in charge of matching orders with drivers in the most efficient way possible."

This sounds like a typical mass production / Frederick Taylor approach to the higher volumes, to divide the work into smaller and smaller (and easier to learn) increments and tasks. Narrow is good in that mindset.

Lean guys might approach this problem by going after cross training and having one person follow an order from start to finish (with maybe the exception of delivery, that could be a specialist). Or, at the least, you might have people cross trained to do more than just a limited task, it might depend on how the different tasks balanced out, time wise. I wonder if a pizza shop with a cellular layout and team structure would beat the performance of a Domino's with this extreme division of labor and the batch-and-queue mentality that problem comes with it?

Then again, if employees in the pizza biz are mostly short-term, maybe you have to go with the extreme division of labor. But, my gut tells me they could do better with a lean approach. My gut also tells me to order "good" pizza, regardless of the production system that's behind it!

One other thought just hit me before I clicked "publish". The major chains (Pizza Hut, Domino's, Little Caeser's) remind me of GM and Ford... pushing mediocre product on people by focusing on discounts, coupons, and promotions!

Too Much Email

Article Link

How much email is too much? Perhaps an even better question – how much of your daily email communication adds value?

Besides reciting the regular complaints about overflowing email boxes and added stress, this article, published in Canada's Maclean's Magazine, adds many important facts to the argument that we are too reliant on email communications. It sites several reasons for productivity losses due to email not the least of which is continuous distraction throughout the day. It also cites that managing email consumes more of people's time than working on real issues or tasks.

Jon Coleman, a Pfizer VP is featured in the article. He set a goal for his department of roughly 300 people to reduce their email volume by 25% over a year. His group then introduced 'Freedom Six to Six' which sets a ban on email messages between 6pm and 6am and on weekends.

There's also some talk of the dreaded CC: email, but beyond this the focus is squarely on reducing the volume of email. No initiatives are noted that aim to improve the quality of messages sent. Establishing criteria to help assess the value in the content of notes may also help improve the amount of value in your inbox.

Here is a related post from the "Got Boondoggle" blog on clear communications.

Womack Wants To Clear The Record On JIT

IndustryWeek Column

Here is the original article in question, from the Wall St Journal. The article did a little fear mongering, as the WSJ seems to do about once a year, about risks of "just in time" inventory practices.

Womack is right to point out that, even in a JIT system, that safety stocks or "emergency stocks" are required to protect against normal demand variations. For vaccines and drugs designed to protect us against bio-terror attacks, thankfully the demand for these is very "spiky", if it's ever going to be needed.

Here is my exclusive 5 part Q&A with Jim Womack from late 2005.

Lean Healthcare: Another ThedaCare Article

Appleton Post-Crescent - Finding a better way

Another article on a hospital organization that has been working on lean transformation. An earlier article is found here.

Lean Government: Grand Rapids

State of the City address by Grand Rapids Mayor George Heartwell:

It's nice to see a city using lean methods and even more noteworthy that the mayor would talk about it in an address like this. I'm glad to see they are focusing on customer service and cycle time, not just cost.

"First, we will continue to find organizational efficiencies that reduce cost without impacting quality of service. A visionary City Commission, committed to the wise and careful stewardship of tax resources, provided funding for an Administrative Lean initiative. For the past six months we have been working in six departments with value-stream mapping and process improvement strategies. The theory we are operating under is that people closest to the work are most knowledgeable in ways to improve work flow.

Let me give you one simple illustration of how this Administrative Lean initiative works. This example comes from Parking Services Department. When a monthly parker cancels a parking contract for any reason a refund is due. That refund is typically $15-50. When the Administrative Lean team mapped the procedure for processing that refund they found that an average of 20 days elapses before a check is issued and that several people had to push a good deal of paperwork around the department to make it happen. The cost of processing far exceeded the amount due and the customer often became irritated at the delay.

So the employees recommended - and management gratefully accepted - an immediate cash refund at the front desk. Instead of tasking weeks to receive a refund, 85% of customers now receive their refund in 12 minutes. The customer walks away happy and the City saves hours of wasted time and enjoys departmental cost savings."

Ford Cars Only in Plant Lot

In a move designed to rally support for Ford's Way Forward restructuring plan announced by company officials on Monday, Dearborn Truck Plant Manager Rob Webber announced that starting next week, only Ford vehicles will be permitted in the parking lot at the plant.

Non-Ford vehicles may still park in employee lots, albeit across the street.

I'm personally a firm believer in supporting your employer in any way possible, however I have very mixed feelings about this type of enforcement. Does anyone have any experience with this type of ban in other industries?

The Daily Show Skewers Ford

Click on the link above for the Daily Show website and video from the show. You have to get past the intro about the Canadian elections first though. Or, you can fast forward to about 1 minute in.

Ford has been "losing money by the truckload. Sadly, the trucks carrying the money away.... Chevys."

W. = "Won't bail out" GM and Ford

WSJ.com - Bush Plays Down Bailout Prospects For GM and Ford:

Also: GM posted more than an $8 Billion Loss for FY 2005, announced today.

Excerpts:

"President Bush said General Motors Corp. and Ford Motor Co. should develop 'a product that's relevant' rather than look to Washington for help with their heavy pension obligations, and hinted he would take a dim view of a government bailout of the struggling auto makers."

Bush said he didn't want to be put in the position to say yes or no to a Chrysler-style bailout, but he made it sound like that wasn't a precedent he wanted to repeat.

In discussing the auto companies' woes, Mr. Bush suggested his sympathies lie more with the workers who are displaced or unsettled by a changing corporate environment, saying his administration would focus on ways to retrain laid-off employees. "This is going to be a very troubling time for workers and their families," Mr. Bush said, adding that companies had an obligation to assist employees they cut loose.

Toyota Drives Into NASCAR

Japanese Automaker Drives Into NASCAR - Yahoo! News

Will they apply kaizen to NASCAR? :-)

It was announced earlier this week that a NASCAR edition of the Camry, the best-selling car in the U.S. in seven of the last eight years, will begin racing in 2007 in both of NASCAR's top stock car series — Cup and Busch.

"Like it or not, Toyota is a very important part of our economy today," said team owner Jack Roush, who fields five Fords in the Nextel Cup series and has won two of the last three championships. "We've got a lot of dealer investment dollars out there and we've got a lot of our population that works in Toyota plants around the country. So they have every right to be here.

I'm sure there is no coincidence that 2007 will also mark 50 years of Toyota selling cars in the U.S. It makes you wonder if Toyota is still a "Japanese" company, or a global one, with a strong American presence?

IndustryWeek "TPS Take 2" Issue

IndustryWeek - Leadership In Manufacturing: February 2006 Issue

It hasn't come in the mail yet, but it looks like the current issue of IW is dedicated to the Toyota Production System. Many, if not all articles are online.

A collection of "fix GM" columns

Jerry Flint, It Takes Many Arrows to Kill an Elephant - Forbes.com

My dad sent me this a while back and laziness kept it off the blog. It's even more relevant this week.

Flint's column begins:

Companies don't downsize themselves to success. Downsizing is an admission that things are bad and that they aren't going to be what they used to be. What's happening now with General Motors and Ford Motor may be necessary, but it doesn't guarantee turnarounds.

The WSJ also has a thought-provoking column today ($$ subscription required, sorry) about the idea of employee ownership for GM. The idea is to buy concessions from the UAW by basically giving them GMAC and a large stake in GM. Something has to be done to get the union on the same agenda as GM, rather than having such an acrimonious relationship. This has been tried in the airline industry, with United Airlines, but critics point out that United workers never had a true management share, something they would recommend for the UAW. Let the UAW share the struggle of running the company, not just being a critic, I say.

If you wonder why the UAW is so combative with GM, this WSJ column talks about Walter Reuther and some UAW history. Reuther instilled the idea that you should be loyal to the UAW, not your employer. I remember, when I worked at GM, that there were many Dodge Ram pickups in the parking lot. The UAW encouraged their "brothers and sisters" to "buy UAW" rather than "buying GM". That always frustrated me, as a salaried worker, who DID care about buying GM.

Auto Companies Must Change From Within

IndustryWeek : Continuous Improvement

Here is an outstanding column from Industry Week and editor Tonya Vinas. It came to my email box courtesy of the Industry Week newsletters (click here to sign up).

Tonya starts by slamming the Wall St. analyst crowd and their wrong-headed views on manufacturing companies.

Five years ago the editors of IndustryWeek invited a stock analyst to come in and tell us how his company identifies value when evaluating manufacturing companies. He was a very nice man, and we sent him away with some nice token gifts. But we editors all had an uneasy feeling as we said good-bye to our guest. His message made no sense to us, process improvement junkies that we are. Essentially, he said, "We don't care what companies are doing internally to make themselves stronger and more productive -- we just care if they make their earnings projections and grow revenues and profits."

That and he's probably only interested in the short-term, last quarter and next quarter. It's that much more impressive, as a friend of the blog pointed out, that Ford announced yesterday that they are going to stop providing quarterly AND annual "earnings guidance" to the street, as part of Ford's attempt to focus on the long-term (ala Toyota).

Tonya then lays out well reasoned arguments about how GM, Ford, and others in the auto supply chain chose to focus on the demands of Wall St.:

This resulted in misdirected and wasteful growth (overcapacity, complex and inflexible production practices), a disconnect from employees (costly union strikes, negotiations and contracts; top-heavy management) and customers who found better options (Honda, Toyota, Nissan).

She makes an attempt to explain why TPS hasn't taken root, particularly with Wall St. and its followers:

The Toyota Production System (TPS) never was meant to be a plant-level cost-cutting tool in the way U.S. companies have used it. It is an internal value system that unfortunately got no respect from the U.S. capital markets because analysts could not make a direct connection to it and the top or bottom lines each quarter. Companies, in turn, devalued TPS, using it successfully to boost productivity but ignoring its real worth. To me this -- more than anything -- explains the mess that the U.S. auto industry is in.

Anyway, I could comment more, but go visit the entire column at the IW website. Quality writing.

Lean and Green in Texas

Thomas L. Friedman (free access via Denver Post):

Although the focus of this column is on the environmental advantages of the new Texas Instruments fab in suburban Dallas, I think there's a nice "lean" story here, as well. Toyota has placed a big focus on "lean and green", which makes sense... classic lean and environmental conservation are all in the category of waste reduction.

"TI always wanted to keep its newest wafer factory near Dallas so it would be near its design center and ideas could flow back and forth. But China, Taiwan and Singapore were all tempting alternatives, offering low wages, subsidies and tax breaks. So the TI leadership laid down a challenge: TI could locate its new wafer factory in Richardson, if the TI design team and community leaders could find a way to build it for $180 million less than its last Dallas factory, erected in the late 1990s.

That would make its cost-per-wafer competitive with any overseas plant's.

Although the TI engineers initially thought it impossible, they pulled it off."

There are some nice elements of this story:

• Management wanted to keep the fab in the U.S. for strategic reasons (faster product development), but also needed to meet traditional cost hurdles.
• Management challenged the team to get creative and they found innovative solutions that were good for the environment AND saved the company money

Congrats to the team at TI!

If you've never read Friedman's book "The World is Flat," you should check it out, it's a good read and globalization.

Let's Be Proactive on Safety

CBS News | Mine Deaths Spur Hearings, Legislation

I'm not an expert on mine safety. I don't know the first thing about mines. It is sad, however, that it has taken terrible tragedies in West Virginia to prompt calls to systemic safety improvements for the mines.

This isn't a new practice, the reactive approach to safety:

"It's unfortunate that every coal mine health and safety law on the books is written with the blood of coal miners (video)," Rep. Nick Rahall, D-W.V., said.

The challenge for lean thinkers here. Find at least one potential safety hazzard at your site today and DO SOMETHING about it. Better yet, lead an F.M.E.A. effort to identify the most likely safety hazzards and prioritize fixes before somebody gets hurt or killed.

Toyota Leadership and Ford Leadership

Jim Press: 'I was in love with cars every second' - Yahoo! News

Here is a bio of Toyota's North American Sales President, Jim Press. It's interesting to see the contrast between Toyota leadership and Ford leadership. Press has been with Toyota since 1970 and rose through the ranks. Ford has had FOUR North American Presidents in four years, including the new guy, Mark Fields, who seems like your classic Harvard MBA big-thinkin' tough-talkin' professional manager.

More about Press and his style...

...he says he tries to show concern for everyone. His management philosophy is what he calls the "servant leader," a hands-off approach in which the goal is to help subordinates as they try to help you.

"I respect the people I work with to the point my job is to help them understand the vision and direction we all want to move," Press says, adding that he then tries to "get out of the way."

Swimming is his main pastime and exercise:

In the pool, "I will think about doing strokes. Every time I take a stroke, I think about where my hand is," Press says.

Each stroke better than the last.

Now THAT sounds like classic kaizen thinking. "Each stroke better than the last." And we wonder why Toyota doesn't have to announce a "new direction" every five to ten years the way GM and Ford have to.

Focus on short term hurt U.S. carmakers

Business Forum: Focus on short term hurt U.S. carmakers:

Let's hope Ford means it when they say they are going to focus on the long-term, ala Toyota.

"In the 1980s, GM adopted lean production halfheartedly, even after it became clear that total quality management produced more reliable cars than Detroit's mass production model."

"Way Forward" Slides Are Online

Click here for the Mark Fields slides about the Ford "Way Forward" campaign.

Ford: Smaller and Nimbler? Layoffs and Innovation Go Together?

The CNBC reporter is now saying that Ford will be "smaller and nimbler." Smaller yes, but more nimble? That remains to be seen. But, I'd argue that companies in this shrinking cycle (and Ford has already been in this job-cutting cycle) hardly see the risk taking and innovation that Bill Ford and Mark Fields are calling for in the new culture.

I know friends at Ford and Visteon who have already been miserable because they're afraid for their jobs and not sure they can find something new in the Detroit area, with the auto industry struggles. This fear and malaise does not lead to risk-taking. It leads to keeping your head down and avoiding mistakes (that often come from risks) that would result in you ending up on the RIF list.

Mark Fields is quoted in the WSJ today that fear "is a great motivator". Ford has come a long way from when W. Edwards Deming preached about eliminating fear from Ford and other workplaces.

What do you think? Can Ford be a risk-taking and innovative company while laying off people and closing plants?? Click comments to chime in.

The Ford "Way Forward" Press Conference

I was able to watch the Ford Press conference, as carried by CNBC. Here are my first reactions, typing as I watch. Detroit News Article here, as well.

• Reporter says they are closing 7 vehicle assembly plants, 3 more than expected, through 2012.
• Bill Ford says they will not stand for "thinking short-term" -- I hope they can really follow Toyota in that regard.
  
• Part of this new long-term focus, the company will quit providing quarterly earnings guidance to Wall St. (joining the list of companies that have stopped doing this). Is Ford being responsive to this particular customer? Wall St. seems to demand this kind of information, right or wrong. They're also stopping annual advice, Ford says "that may be contrary to the advice of those of you in this room. We cannot succeed in the long-term if we are only focused on the short-term." He then mentioned the need to focus on customers and products, that "sustainable" results will follow.
  
• B. Ford also wants employees to have "more freedom, to take smart risks, and to demonstrate their creativity." That also seems Toyota-like, in philosophy.
• B. Ford saying the new approach is"If they buy it, we will build it" sounds like a desire to move toward pull or even build-to-order manufacturing, as opposed to the "business as usual" idea of "If we build it, they will buy it."
• In his introduction, B. Ford talked about different types of improvement and efficiency. I'm pretty sure "... and on the factory floor" was the LAST thing mentioned. That doesn't seem accidental. Most of us lean guys have a shop floor bias, while most automotive leaders have a marketing or finance focus. Doesn't seem like B. Ford has a shopfloor focus.
• Ford stock is up about 3 cents per share during this speech. CNBC putting the real-time stock price up sure illustrates "short-term" focus. It went up another 2 cents when B. Ford started a new "my great grandfather" story (Henry Ford).
• Ugh, CNBC cut away from the press conference. Their talking head reaction is that the plan is "much more aggressive" (in terms of cuts) than Wall St. expected. It's frustrating that all they (Wall St. and the media) seem to focus on is cuts, costs, and numbers, not the cultural transformation that Ford wants to undertake.
  

Top secret Ford plan: Recyclable vehicles

01/23/06 - The Detroit News

Details are starting to come out on the new Ford plan, beyond the expected plant closures and layoffs. Looks like Ford doesn't want to be a "me too" car company, I'll give them credit for taking a unique approach. Now, will people rally behind it? As Bill Ford said in November, "Get on board or leave."

For "Lean", Chrysler Cuts Tradespeople

01/22/06 - The Detroit News

Don't worry, these skilled tradesmen will go into the famous JOBS Bank and receive almost full pay for doing nothing (something I've written about a lot on this blog).

It *IS* necessary for Chrysler to reduce the number of skilled trades categorie. The old UAW classifications forced factories to keep an artificially high number of tradesmen employed and created much waste that companies can't afford when they're competing against Toyota. One of the first things Toyota did when they took over NUMMI from GM was to reduce the number of trades classifications.

Let me give an example the waste rom when I worked at GM. Let's say we were doing a Saturday maintenance project that was mainly electrical in nature. If the project required someone to turn a wrench at the start of the project and at the end of the project, the electrician was not allowed to do that work. We had to bring in a Pipefitter, who would get the minimum four hours of overtime for doing maybe one minute of "value added" work. The rest of time was spent smoking, eating, and/or sleeping. Nice gig if you can get it.

Now, I'm on the record as being opposed to layoffs as a result of lean. What if Chrysler took these folks and had them work on continuous improvement projects? Why the hell not, you're paying them almost 100% pay anyway. You might as well potentially get some value out of them and let them feel like they are accomplishing something. Ah, I'm a bit far removed from the auto industry. I almost forgot most of these guys have a long-standing grudge against management and the company and wouldn't want to help the company improve anyway. Sad.

Another trip down memory lane for me.... go to the article and click on the picture of the memo from the UAW. I can't believe, in the year 2006, they STILL TYPE THEIR MEMOS IN ALL CAPS! :-) I should create a website with all of the funny memos I have from my GM/UAW days.

U.S. has one rising carmaker: It's Toyota

Business - International Herald Tribune

You could argue that Nissan and Hyundai are also rising, particularly here in the U.S.

Paragraph three, in this article, focuses on Toyota's "lower labor costs." Is that about the only thing business writers and executives can focus on, labor costs?

It's only at the very end of the article where they talk about the cost savings that I think of when I think of Toyota. It's kaizen, employee involvement, and the continuous improvement process that count, not cheap labor.

Acting on suggestions from workers in eight countries where the Camry will be produced, Toyota's engineers and designers cut its development time from 23 months to 17 months.

Thanks to simplified production methods, Toyota's plant in Georgetown, Kentucky, will reach full speed in 15 days, versus the 45 days needed to ramp up production of the previous Camry.

Meanwhile, Toyota reconfigured the process it uses to produce plastic parts at the plant, allowing it to bring back work from a supplier and create 45 jobs at the plant, which employs 7,000 people. Those jobs are at labor rates of about $44 an hour - roughly $23 less than those paid by Detroit automakers, because of vastly lower costs for health care and retirement.

Lean Education Academic Network Announced

Lean Education Academic Network (new website)

The Lean Enterprise Institute has announced a lean academic network for professors and universities that are teaching lean principles. There is certainly room to teach lean princples within engineering disciplines (particular Industrial Engineering and Mechanical Engineering) and also in business school. I know most of my business school classmates view the world as finance people or marketing people. Operations was something you took one required course in and maybe learned "Toyota is good" (unless you were part of the manufacturing-specific program).

Good luck with the "LEAN" network. It's a noble purpose and I hope it does well.

The full press release can be read at the LEI website, but it requires a free registration.

A question for blog readers: What colleges and universities are doing a good job of teaching lean, whether it's in undergrad, grad school, or certificate programs? Click "Comments" to add your thoughts.

Good luck to Ford workers on "Black Monday"

'Black Monday' looms over Ford's future - 01/22/06 - The Detroit News:

Good luck tomorrow when the "Way Forward" plan is introduced. It sounds like some tough cuts have to be made, the sad reality is that Ford has way too much capacity than sales. Management can shuffle the deck chairs and make excuses for not selling enough, but the factory people take the brunt of it when they're no longer needed.

Of course, you might ask why Ford didn't act sooner.

Even if Ford boarded up all of its American factories tomorrow, it would still have to pay the 87,000 United Auto Workers members who labor in them, while also continuing to cover health care and pension costs not only for them, but also for twice that many UAW retirees and their dependents.

This is true for GM also, thanks to the negotiated "JOBS Bank." Why would GM and Ford agree to such a clause?

Part of the blame falls on GM and then-CEO Roger Smith who thought automation and the "lights out factory" was the wave of the future. The UAW feared the mass job losses and fought for protections for workers displaced by automation. Turns out that the lights out factory was a bit of a pipe dream, but Ford and GM sales dropped much faster than they would have wanted to anticipate. The thousands of people in the JOBS Bank wasn't caused by automation.... it was caused by declining sales, blame for that has to fall squarely on management's shoulders.

Imagine how things might have turned out differently if GM had been obsessed with Toyota-like principles of waste reduction and employee involvement? What if GM, instead of investing in robot experiments, had invested in training and education in true lean mindsets and approaches?

Now, Ford and GM would have still had to keep sales up... but with a better focus on people (rather than technology), I'm sure quality would have improved faster and that certainly would have help prevent such a sales slip and the need for as many plant closures.

Another Lean Design

Goodyear Engineered Products has introduced a universal heater hose system to help auto parts retailers and installers eliminate thousands of inventories parts while improving service.

There's an article at just-auto.com, but unfortunately a subscription is required to view the full story.

The key to the design is a flexible hose system that eliminates the need to inventory hundreds of molded specialty hoses with all the right lengths and bends. Besides not having to inventory hundreds of parts, shops and stores never have to search for the right hose nor do they have to send customers away because they don't have the right part in stock.

Just another example of how the right product design can eliminate waste.

Leaving money on the table

On January 12, Jim Press, President and COO of Toyota Motor Sales presented at the Auto Analysts of New York Conference hosted by Lehman Brothers.

You can link to the webcast through the Investor Information area of Toyota's website.

The webcast includes a downloadable slide presentation that provides all kinds of detailed information about Toyota and Industry performance in 2005. It also includes information on 2006 product releases, the San Antonio truck plant scheduled to open this fall, and how Toyota views the market moving forward.

During the Q&A section, Jim Press answers a couple of questions that are very telling of Toyota's strategy and philosophy. When asked about 'leaving money on the table' by not raising prices, Mr Press indicated that Toyota would not increase prices to show increased profits in the short term. Instead, they will continue to grow value through higher quality and maintaining high resale values - benefiting customers, and in the long term benefiting Toyota through repeat sales.

This responses illustrate very clearly that Toyota's lean values of having a long term outlook and generating value for the customer permeate every area of their business - including marketing and sales.

Merck, I told you so...

Kaizen and Lean Manufacturing thoughts | Gemba Panta Rei

Here is a sad update on Merck's "lean" efforts (click the link above). I hate to call what they are doing "lean" but that's what Merck is calling it.

I posted this back in November, my prediction "I'll bet that Merck's lean effort fails".

It goes against common sense and basic human nature to think that people are going to be motivated to help drive true lean, via continuous improvement, if they are afraid for their own jobs. Merck announced, in November, that they were going to cut 7,000 jobs in the midst of a lean initiative. This is a path for failure. People will clam up and work against management, if it seems like it's in their own best interests.

In this new article (at the Panta Rei blog), Merck says:

Determining job cuts are part of the lean manufacturing system aimed at streamlining.

It makes me very angry to read this. One of the definitions of lean I like best is Norm Bodek's, which I paraphrase as :

1) eliminate waste
2) have respect for people

Furthering goal #1 requires meeting goal #2. It's through having respect for people, listening to them, fixing their problems (waste), and eliminating fear that you will drive employee involvement and true continuous improvement.

Cutting heads is, at best, a short term "fix" that might fool Wall St. for a little while.

Another thing I just realized, if you google "merck lean", the first thing that comes up is my inflammatory blog criticism of them. I hope I don't get sued for that!

Update: another article on the plant layoffs. Although 20% of workers will lose their jobs, they are in limbo for a month until they find out. Ah, how morale will soar in the mean time! This is the first Merck plant to do "lean." I'm sure the other plants can't wait.

An Obvious Poll Result?

Autos Talk - The Detroit News Online - 01/18/06

I'm surprised the "yes" vote is only 88.84% for this question, posed by the Detroit News:

"Ford workers, is anxiety over anticipated plant closings affecting your workplace?"

Seems like rather obvious human nature that, yes, this would impact people. I think the lesson for lean leaders is to think about your employees' anxiety and do what you can to reduce it. Even if your company is not in financial trouble when you start your lean initiative, there will be anxiety and fear, rational or otherwise. A good leader doesn't discount this and say "they shouldn't worry." People DO worry, it's a normal human emotion. Recognize it and deal with it the best you can.

Iowa and Lean, Once Again

Making Iowa more business friendly a goal for lawmakers

Iowa sure pops up quite a bit in the lean news, between Maytag and Pella, and Gov. Tom Vilsack's promotion of lean.

In this case, the Governor is trying to help promote lean throughout the state, including his own government (thanks to the Gemba Panta Rei blog).

Vilsack's plan also includes creating the Lean Manufacturing Institute, which would provide training for Iowa's manufacturers. The training would help companies focus on methods of reducing inventory, on-time delivery and higher productivity.

Here are some earlier articles referencing Iowa.

Bodek Q&A Picked Up By Indian Magazine

Industry 2.0 : Lean Mantras

This is more "Blog news" than "lean news", but my Q&A with Norm Bodek has been reprinted (with my permission) in an Indian business magazine (print and web).

Gemba Panta Rei: Pandemic Preparation: Just in Time or Just in Case?

Kaizen and Lean Manufacturing thoughts | Gemba Panta Rei

I was going to blog about this, but Jon Miller from the excellent Gemba Panta Rei blog beat me to it and had some outstanding comments. So, I'll just point you his way.

I'll just re-emphasize the point that inventory is a symptom of other problems, including lead times (long or variable), demand variability, and quality variability. My challenge to you, as a reader, is to find a case where someone says "we need to cut inventory" and find the root causes for why that inventory is being held, then work on a root cause, such as reducing supplier lead time variability.

This article, and Jon's comments, also emphasize one way "lean healthcare" is different than lean manufacturing -- it can be very tough to plan capacity or level load your demand when pandemics can occur.

Airlines: Cost and Value

WSJ.com - As Airlines Pull Out of Dive, United Charts Its Own Course ($$ Subscription)

Most of what we hear about airlines is "low cost" this or "cutting costs" that. Everyone is chasing Southwest's low labor costs or copying them in other ways.

United Airlines is taking a different approach -- focusing on value, not just cost.

Determined not to be another clone of low-cost, low-fare juggernaut Southwest Airlines, United is making an all-out effort to raise revenue by pampering its best business travelers -- and keeping them on United whether they are flying to a meeting on the coast, or taking the family to Orlando. That means accepting higher costs, the very problem that drove it into bankruptcy in the first place.

United is deciding that "value" includes:

• More legroom (American Airlines back off it's old "More Room in Coach" strategy)
• Keeping blankets and pillows onboard (many airlines are cutting these)
• Expanded domestic business class service and lay-flat seats on coast to coast flights

Thinking as a lean guy, I would also challenge the idea that more service means "accepting higher costs." Maybe if they focused on eliminating waste, rather than eliminating things that customers value, then United could have both -- better service AND lower costs??

United CEO Glenn Tilton says something that could be applied to manufacturing companies, as well:

"It doesn't take talent to take the pillows off" planes, says Mr. Tilton, a former oil-industry executive who has guided United since September 2002. "In the industry's herd mentality, we were supposed to trundle down the runway of commoditization," he says

You could argue it also doesn't take talent to close plants, to lay off workers, or to cut features from products ("de-contenting," in GM-Lutz-speak) in an effort to save money. It's much tougher to maintain or improve value.

An example of how American Airlines cost-cutting helped cut valued "elite" customers:

An elite American frequent flier for two decades, he says he switched to United a couple of years ago because he got fed up with cost-cutting and service lapses at American. A trivial detail was the final straw: An American flight attendant in first class said she could offer only skim milk for his coffee. "No half-and-half in first class?" he says. "They lost a $100,000-a-year customer." (American's Mr. Cush says the company thought it could save money by dropping cream, but reversed that decision after passengers complained.)

This discussion reminds me of Eli Goldratt (author of The Goal), who said something to the effect of "You can only cut costs to zero, but revenue can up to inifinity!" It's the same thinking that's behind Womack and Jones's Lean Thinking and Point #1 of understanding value, as defined by the customer. Point #1 was not "focus on cutting all costs."

One other thought, related to employee satisfaction and how that translates into quality. Now I haven't flown United in a while, and that's by choice. Their employees were grumpy and nasty as they were entering bankruptcy. That's one thing that will be difficult to fix. I assume that fliers value friendly and helpful employees (I know I do). In the manufacturing world, you hear horror stories of little "presents" that disgruntled auto assembly workers leave inside the doors of vehicles as they go down the line, because they hate their employer so much and don't care. The same idea applies in the service industry. I can tell when employees hate their employer, whether it's an airline or otherwise -- you get bad service.

Maybe I'll give United another shot to see if they've improved.

More on Chrysler and Teams

Rockford Register Star - Assemblers shift to team concept key to success

A follow up to an article posted by Luke last week regarding Chrysler and teams. Here is a success story of a Chrysler plant in Illinois that made the transition, somewhat begrudgingly, to the team concept.

One reason that workers were resistant to changing was that the plant, even without the team concept, was ranked at or near the top in Harbour productivity rankings. Nothing was mentioned about quality rankings though.

You'd have to assume that, with the team concept, productivity would improve due to cross-training and improvement ideas.